U.S. Airlines Seek Vacation Boost After Delta Variant Stops Recovery

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An airliner passes the moon as it makes its final approach to Heathrow Airport in London, Britain September 12, 2019. REUTERS / Toby Melville / File Photo

BOSTON, Oct. 8 (Reuters) – U.S. airlines are considering the upcoming holiday season and the reopening of the vital transatlantic route to regain momentum lost in the last quarter following a resurgence of COVID-19 cases.

After a strong summer travel season, airlines had to temper their outlook last month for the quarter through September as the rapidly spreading Delta variant of the coronavirus slowed new bookings and led to an increase in cancellations. Read more

A month later, declining COVID-19 cases raised hopes in the industry that passengers would be more confident to fly again.

Financial services firm Raymond James performed an analysis of the Transportation Security Administration’s 7-day average passenger screening data, which showed that while travel demand is still behind the peak at the end of July, it s ‘has improved from the lows in mid-September.

“Cancellations have gone down, bookings are resuming,” Hawaiian Holdings Inc (HA.O) chief executive Peter Ingram told Reuters in an interview. “As we come to Thanksgiving and Christmas, we have the opportunity for a strong and solid recovery.”

Bookings have also picked up at Delta Air Lines (DAL.N), which expects demand for domestic travel to surpass 2019 levels next year. Read more

United Airlines (UAL.O) announced Thursday that it will carry out its largest domestic program since the start of the pandemic, offering more than 3,500 daily domestic flights in December – representing 91% of its domestic capacity compared to 2019.

“There is a lot of pent-up demand,” said chief executive Scott Kirby.

The International Air Transport Association (IATA), a consortium of 290 airlines, expects North American airlines to return to profit next year ahead of their counterparts in other regions. Read more

BUSINESS TRIP

The outlook for the industry’s cash cow – business travel – remains uncertain.

Airlines for America, an industry trade group, estimates that business travel accounted for up to 50% of the airline industry’s passenger revenue before the pandemic.

The carriers were counting on reopening of offices for a resumption of business travel this fall. But the Delta variant has forced many large employers to postpone their office openings until next year.

Airlines say revival is inevitable. However, there is no consensus on the timing.

United’s Kirby expects business travel to return to pre-pandemic levels in 2023, but JetBlue (JBLU.O) chief executive Robin Hayes believes it could take “a few years.”

The New York-based low-cost carrier has reallocated flights from some business markets to leisure markets, Hayes said.

“We continue to believe that… the holidays will be strong,” Hayes told Reuters in an interview. “This is definitely what we are seeing in our advance reservations at the moment.”

REOPENING OF THE TRANSATLANTIC ROAD

Airlines, meanwhile, are backed by the Biden administration’s plan to reopen the United States in November to air travelers from Europe. The transatlantic route is one of the most lucrative in the world and accounted for up to 17% of passenger revenues in 2019 for the three major carriers.

All US carriers, which serve the market, have seen an increase in bookings since the White House announcement.

Kirby said United’s bookings for transatlantic flights last week were higher than the same period in 2019. Sales also jumped at Delta Air and JetBlue.

The reopening is not only an opportunity, but is also seen as a great test for the industry.

A successful reopening of the world’s largest long-haul market should set a trend for other markets to follow. However, a reimposition of restrictions if COVID-19 cases start to rise again could also slow the fragile recovery.

“Restrictions can’t start to reappear where they left off,” Hayes said. “It acts as a big drag on demand.”

Reporting by Rajesh Kumar Singh; Editing by Aurora Ellis

Our Standards: Thomson Reuters Trust Principles.

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